Why Clean Energy Groups Are Singling Out PJM for Criticism on Grid Resilience
PJM has linked grid resilience with market changes that would benefit coal and nuclear power. Critics say it’s the wrong approach.
Grid resilience is one of the hottest issues in U.S. energy policy, with last year’s hurricanes in Texas, Florida and Puerto Rico showing the stark consequences of failing to prepare the grid to withstand and recover from catastrophic events.
But it has also become intertwined with the Trump administration’s efforts to bail out economically uncompetitive coal and nuclear power plants, from Energy Secretary Rick Perry’s attempt to get the Federal Energy Regulatory Commission to provide coal and nuclear plants with out-of-market payments, to the continuing possibility that DOE will use emergency powers to keep FirstEnergy’s bankrupt coal and nuclear fleet afloat.
PJM Interconnection, the country’s largest interstate transmission operator, is the nexus of these interlocking policy battles. Not only is it the home of most of the coal and nuclear plants facing closure, it’s also alone among the country’s six interstate grid operators in linking the issue of resilience specifically with policy proposals that would help coal and nuclear plants at the expense of the cleaner-energy competition.
PJM’s outlier approach: Make grid resilience a market issue
Last week, PJM joined in with the coal and nuclear industries — and against the rest of the country’s grid operators — to request that FERC make the linkage between resilience and market reforms explicit for the rest of the country as well.
“Initiatives to enhance resilience of the grid should not, in PJM’s view, necessarily stop at the borders of any particular RTO or ISO, or for that matter be limited solely to RTO and ISO footprints,” it wrote in its final filing for FERC’s resilience proceeding. This docket, opened in January, was created as part of the same vote that rejected Perry’s request for market supports for coal and nuclear power plants, and asked RTOs and ISOs to define grid resilience and study how to improve it.
PJM also differed from its fellow ISOs and RTOs in its initial March response to FERC’s resilience docket, by proposing a number of market rule changes and asking for a nine- to 12- month deadline from FERC to file detailed rules for all of these proposals.
The stark difference of opinion between PJM and its fellow grid operators was made clear last week, when ISO-NE, New York ISO, California ISO, the Southwest Power Pool and the Midcontinent Independent System Operator took the unusual step of making a joint filing before FERC. The filing asked the commission to “reject PJM’s requests and allow individual RTOs/ISOs to pursue the resilience-related issues and initiatives,” based on what their stakeholders have identified and on their own timeframes.
That’s the approach also endorsed in filings from the Environmental Defense Fund, the Sierra Club and the Natural Resources Defense Council, as well as mainstream utility trade group the Edison Electric Institute and the generator trade group Electric Power Supply Association.
These critiques center on the fact that there’s little evidence that PJM is facing any kind of resilience problem that requires a short-term fix. As multiple filings noted, PJM’s own studies have shown that it can manage grid reliability — the most commonly used standard for keeping the grid running safely across all conditions and circumstances — as more coal and nuclear power is replaced with natural gas, wind and solar power. A more recent study indicated PJM could manage the loss of FirstEnergy’s three nuclear plants slated for closure without additional threats to reliability.
“PJM has not, to my knowledge, offered analytic evidence that there is some kind of existential crisis,” said Michael Panfil, director of federal energy policy for the Environmental Defense Fund. Indeed, PJM reported last week that it’s expecting the reserve margin this summer to exceed 28 percent, nearly twice its required 16.1 percent, another sign that it is not facing an immediate threat to grid reliability.
Instead, PJM’s concern seems to be that “energy prices are too low,” he said. This brings in the other thread to PJM’s resilience push — a set of capacity market price formation reforms that could not only bolster coal and nuclear at the expense of the competition, but also create a new and troubling precedent for federal energy regulations to trump state energy policies.
A question of market balance versus states’ rights
PJM’s resilience filing comes a week after the final proposals for changing capacity markets were filed before FERC. PJM has closely linked these proposals with its resilience efforts, calling them an “important and inter-related component of ensuring grid resilience.”